UK Government urged to 'stop banks closing the last branch in town'

The UK Government should intervene to stop banks from closing the last branch in town to halt the “devastating effect” on communities, the Scottish Affairs Committee has said.

In a report on access to cash and financial services in Scotland, the committee called on the government to introduce legislation if necessary to prevent any more towns from losing their last branch.

Pointing to the rate of bank closures and ATM removals across the country, the committee also recommended the UK Government introduce an overarching strategy on access to cash to stop communities becoming “cash free against their will”.

The committee released the report during an event in Cambuslang where the chair and representatives from the Cambuslang community council discussed the impact of a reduction in access to financial services.

Cambuslang community council welcomed the findings of the "hard hitting report". 

The report is the result of the committee’s ‘Access to Financial Services’ inquiry, which was launched in February.

It said: “We believe that there will continue to be a need for cash for the foreseeable future and welcome the minister’s agreement about its continued importance for society, particularly in Scotland.”

The reduction in number of bank branches and ATMs has had a “devastating” impact, particularly on rural areas, the elderly, those on low incomes and small businesses, the report says.

According to evidence from the consumer watchdog Which?, quoted in the report, over a third of branches in Scotland have shut since 2010 and more than 350 ATMs were removed in 2018 alone.

At the same time, a greater proportion of people in Scotland compared to the rest of the UK are reliant on cash, which the committee says could be due in part to poor digital connectivity in many rural areas, making “digital payments and online banking unreliable at best and impossible at worst.”

Up to nine per cent of people have to drive in order to reach an ATM or bank branch in order to withdraw cash.

As well as making banks to keep more branches open, the committee recommends that the main ATM network provider drop its plans to reduce interchange fees, which help to keep ATMs free for users.

The report also recommends that banks work more closely with Post Offices in areas where basic financial services are being provided by Post Offices following branch closures.

Committee chair Pete Wishart said: “It is disgraceful that banks think they can abandon Scottish towns with no access to essential financial services.

“Last year my Committee demanded that RBS halt their march of bank branch closures, but since then the picture seems to have just deteriorated further – in 2018 in Scotland 355 ATMs were shut down, and bank branches continue to close at an alarming rate.

by Jenni Davidson

Communities, Housing & Planning

Which? calls for regulator to protect access to cash as bank branches close

“Scottish communities are becoming “cash free” against their will and it is time the government stepped in to intervene.

“My committee is calling on the government to stop banks from closing the last remaining bank branch in town. It is essential that towns are left with at least one bank, so if the banks won’t make this commitment themselves, the government should consider legislating.”

Citizens' Advice Scotland has welcomed the report's findings, and said that taking action to secure access to financial services will help protect vulnerable people in society.  

CAS Financial Health spokesman Myles Fitt said: “We’re concerned about the impact of bank closures on the most vulnerable in our society. Our network helps hundreds of thousands of people each year and we think making it harder or more expensive to access cash will be detrimental to many of the people we help. 

“Not having access to banking services impacts on vulnerable groups in local communities. These include elderly people who value proximity and social interaction with staff, those customers who have learning or mental health issues and are in need of face-to-face support, and those people unable to travel to access the next available bank, particularly in rural communities. Withdrawing banks also impacts on people on low incomes who need cash to best manage their finances. 

“Citizens Advice Scotland welcomes all measures to stem the tide of bank closures in communities across Scotland.”

The FSB also welcomed the report and called on the government to take "swift action" to defend local banks for the sake of small businesses. 

Andrew McRae, FSB’s Scotland policy chair, said: "The Scottish Affairs Committee is right to argue for action – including legislation - to retain our remaining local banks, as well as our cash machine network. However the big banks have shrugged off these sorts of reports before. This time must be different."